Investor Enthusiasm for AI Stocks in China Continues Unabated

The robust performance of Chinese stocks this year has been largely driven by the strong performance of companies related to work in artificial intelligence.

There may be a lot of discussion globally about whether there is an AI bubble about to burst, but those fears haven't reached Chinese shores. AI companies keep reporting revenue and profit increases, with share price keeping rising. The pipeline of next-generation ideas continues to fuel investor enthusiasm.

Leading domestic AI chip firm Cambricon reported revenue for the first nine months of the year surged 24 times from a year earlier to 4.61 billion yuan (US$640.2 million), with net profit of 1.6 billion yuan. The company cited AI for the strong results.

Interestingly, these technology stocks -- from chip design, semiconductor manufacturing and memory chips to co-packaged optics (PCB) and software -- have proven immune from the China-US trade tensions that have roiled other industries.

The revenue growth of Chinese AI chain companies shows a maturing industry and intense market demand from sectors like energy storage, robotics and telecommunications.

The release of DeepSeek's low-cost large language model earlier this year signaled China's emerging importance in AI-related technologies and the depth of penetration AI is making across industries.

A report from Zheshang Securities suggests that the supply chain of domestic computing power is veering toward Made-in-China technology. Chip firms like Cambricon are increasingly finding favor with mainland customers.

Fellow AI chip firm Hygon Information reported nine-month revenue rose 55 percent to 9.5 billion yuan, with net profit up 29 percent to almost 2 billion yuan. The company credited the growth to deepening ties with system manufacturers and ecosystem partners in key industries.

SMIC, the Chinese mainland's largest chip maker, earlier reported that first-half profit doubled in 2025. It will post the third-quarter result later this month.

SMIC, Cambricon and Hygon are now the top three listed firms on Shanghai's STAR Market, home of science and technology stocks, which has surged 24 percent this year.

Nvidia is undoubtedly the brightest star in the global chip marker and Chinese companies in its supply chain greatly benefited from its development. China's three largest co-packaged optics firms -- all listed in Shenzhen and known collectively in China as "Yi Zhong Tian" -- supply Nvidia, and their stock prices have surged by up to 3.5 times this year.

Nvidia is developing co-packaged optics technology, which integrates optical and electrical components into a single package to boost the performance and efficiency of networking switches for AI data centers. This technology has created a new, complex supply chain.

Recent upgrades in the technology to speeds of 1.6 terabits per second from 800 gigabits have doubled transmission bandwidth and been a catalyst in the co-packaged optics industry.

Shenzhen-listed Zhongji Innolight Co, whose share price has jumped 259 percent this year, said its major clients are increasing capital expenditure, accelerating the optical modules toward 1.6T and higher speeds. Industry expectations suggest that 1.6T optical module earnings will begin to be realized in 2026.

According to researcher Light Counting, 800G and 1.6T optical modules will see rapid volume growth in 2026, with the total market size expected to exceed US$22 billion by 2030.

According to Wind forecasts, co-packaged optics firms InnoLight, Eoptolink and TFC ("Yi Zhong Tian") are expected to achieve high growth in net profits approaching 50 percent in 2026.

Another rapidly developing segment is printed circuit boards or PCB, where AI needs higher densities. Company like Shanghai-listed Wus Printed Circuit has seen a 75 percent stock price increase this year, with its latest earnings report due out on October 29.

Many Chinese chip and robotics manufacturers are queuing up for initial public offerings, including Moore Threads, MetaX and Biren Technology. Some companies are being hailed as "China's Nvidias."

Leading humanoid robot makers that depend on AI technologies continue to report orders worth hundreds of millions of yuan. Top companies like Unitree Robotics are also preparing for IPOs. Shanghai-based AgiBot has already acquired a controlling stake in a listed company via a stock purchase, with its stock price subsequently soaring over 10-fold this year.

One of the giants in Chinese technology is Huawei, though it's not publicly listed. SiCarrier, which employes many former Huawei technicians, has become a focal point for investors amid expectations of a breakthrough past the US-instigated blockade against exports to China of Dutch-based ASML technology used to produce integrated circuits.

Although SiCarrier has announced no plans for an IPO yet, its prospects have benefited domestic semiconductor equipment manufacturers like Shenzhen-listed Naura Technology and STAR-listed AMEC.

The power of China's technology industry is evident everywhere.

STAR-listed Kingsoft Office recently saw a major surge in its share price after the Ministry of Commerce made a major announcement using its WPS file format instead of the usual Microsoft format. Kingsoft currently boasts 651 million monthly active users globally, including 200 million in overseas markets.

Other companies drawing big investor interest are AI translation firm iFlytek and AI monitoring firm Hikvision.

IFlytek said its third-quarter revenue rose 10 percent from a year earlier to 6.1 billion yuan, with net tripling to 172 million yuan. Hikvision posted revenue in the first three quarters of 65.76 billion yuan and net profit of 9.32 billion yuan, up 15 percent.

As important providers of AI servers and related services in China, the nation's three major telecom operators are also clearly benefiting from the AI frenzy. China Mobile and China Unicom have reported their best profit growth rates in recent months.

Finally, memory chips, autonomous driving, gaming and energy storage could all become explosion points benefiting from AI. Technological breakthroughs related to energy, in particular, are garnering attention amid fears of an ultimate bottleneck for AI because of insufficient energy supply.

Galaxy Securities said AI is the core growth driver for technology stocks. Investment bank Citicorp recently highlighted the potential upside in demand in the optical module sector, advising clients of a buying opportunity, forecasting of a 100,000 fold surge in computing power by 2035. Goldman Sachs is also predicting Chinese stock markets will post gains of 30 percent by the end of 2027.